I think a lot of people are confusing the formation of a federation (a union of partially self-governing states) with becoming a democracy (a government where citizens directly elect representatives that form a governing body).

Ul'dah, Limsa Lominsa, Gridania, Ishgard, Ala Mhigo and some of the "lesser" states such as Revenant's Toll, Idyllshire and Hraesvelgr's Brood to form a unified Eorzean Federation to oppose Garlemald with each state keeping it's own style of state government makes some sense.